Morne Prinsloo, a Divisional General Manager for Mortgage Plus in South Africa, says it is still possible for you to buy wisely. He says that you should consider property as a solid long-term asset.

Am I ready to buy property?

Whether you are buying your dream family home or a starter apartment, you are signing up for a 20-year commitment. You will also have substantial upfront costs, including transfer duties and bond registration fees, as well as the schlep of moving and changing your address. You need to be willing to sacrifice some flexibility in your life and take on the responsibility for maintenance. Think about whether you can afford it. Do you have a steady income, Will you have enough money left to live on — and buy necessities— after you have paid the bond

Prinsloo also recommends that you stress-test your budget by at least a 3% interest rate increase to check that you will still be able to afford your bond repayments should rates go up even further.

Do I need a deposit

If you’re buying for the first time, you probably don’t have a deposit. If you are selling a property you already own, the amount you have paid off on your previous bond can be used as a deposit on the next one. There are home loans available for first-time buyers which cover the full amount of the house price (i.e., you are getting a 100% bond) However, any money you have available upfront will help. You will end up borrowing less, at a better interest rate, which helps a lot in the end.

Even if you do not have a deposit, start saving now. Financial coach Suze Orman recommends taking the difference between what you currently pay in rent and what your bond repayment would be, and depositing this into a savings account every month. She says you should do this for six months to test whether you really are ready to make the extra financial commitment that comes with home ownership. After six months, you should have a substantial amount to put towards your new home and even if you decide you are not ready for the property plunge, you will have a nest egg for other investments.

Ok, I am ready. What do I do now?’

Get yourself pre-approved for a bond, by a mortgage originator 011.327.4489 . That way you will know how much money you are able to borrow in order to buy, and what your monthly repayments on that amount would be. Pre-approval is exploratory and does not mean you have to commit to taking out a mortgage bond with that particular institution.

Where do I start looking?

In the property game, you only get lucky by looking… and looking and looking. One investor, who has owned literally hundreds of properties, told me, “The more I look, the luckier I get”.

Get into the habit of combing the week- end newspaper property supplements. These have the most comprehensive listings and you will get a good idea of where prices are going in the suburbs you are interested in.

Look at www.property24.com, “Tip by Mortgage Plus”, which lists properties from all the leading estate agents.

If you can stand the regular intrusion, contact a couple of estate agents and tell them what you are looking for. That way they can bring properties to you.

Robert Kiyosaki, real estate guru and best-selling co-author of Rich Dad, Poor Dad, advises making a habit of driving or jogging through the areas you want to buy into. If you do this regularly, you will find out whether you really like the area and would enjoy living there and you will notice new developments that could enhance the area or destroy your view!

- Look at show houses. Even if you are not planning to put in an offer, you will get an idea of what you get for your money.

- Be practical. Do not let your heart overrule your head. Is the location right, Is the property close to good school, Even if you don’t have kids, proximity to schools will make your property more desirable. What about nearby shops, Can you live with the traffic, Is the accessibility of public transport important to you.

- Are other developments going up nearby this may mean your suburb is becoming sought-after, but it can also mean that when you want to sell, there could be a glut of homes on the market. If it is not such a smart area, are there plans in place to combat crime and grime

What features are important to you?

Here are a couple to consider:

- Will you need a spare bedroom or study?

- What kind of security arrangements do you want?

- Would you prefer a private garden or a balcony?

- Do you want a lock up-and-go arrangement or are you happier with higher maintenance

- Do you have pets?’

- Do you want access to a swimming pool?

- How much parking do you need?

- Is the view important to you?

- How much sun would you like

- And do not forget rates and levies. These can vary substantially and can make a big difference on a property’s affordability.

I have found a place I want to buy. What now?

Firstly, check the contract the estate agent hands you, says Gavin Muller. When you make an offer, you should be free to choose your mortgage provider and conveyancing attorney. If there are clauses in that contract binding you to certain firms, your choice is taken away.

Shop around for a mortgage. You can apply directly through Mortgage Plus bond originators who will negotiate on your behalf. “And it’s FREE”

Shop around as much as possible to get the best interest rate possible — half a percent difference may not sound like much, but it will make a noticeable difference to your repayments. If you are not happy with the rate offered, ask for a better one.

Always pay in extra on your bond repayments, no matter how small, to give you breathing room in the event of a rate increase. You will also shave years off your bond.

Do not forget insurance

Shop around for homeowners’ insurance or buildings insurance, says French. Under the new National Credit Act, the bank from which you have obtained your home loan will not be able to force you to buy their policy. This is insurance for the building itself and pays out the replacement cover of your home if it is damaged. The monthly premium ranges from R250 to R500, so it is worth looking at a range of options.

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za

TOP TEN TIPS FOR FIRST-TIME HOME BUYERS

ALWAYS CHECK THE FINE PRINT AND MAKE SURE YOU WORK WITH THE BEST PROFESSIONALS

The real estate profession is today attracting the very best professionals, joining the industry from all backgrounds. Legal people, entrepreneurs, doctors, university professors and others realise that property is very much part of most people’s lives.

With a recent slow-down in the property market due to tightened environment created by the National Credit Act, it has become vital to consult the best real estate professional and to know what to be expecting in terms of contractual issues if you are a first time buyer.

All humans have basic needs, as philosopher Abraham Maslow established in the 1950s in his well-known hierarchy of needs. And the need for good shelter is chief amongst these, Maslow found.

With this in mind, says Jeanne van Jaarsveldt, “it is always important to point out that there are certain important things that first-time home-buyers should be aware of and in our continued search to deliver the best service in the real estate industry in South Africa, we thought it well to formulate a standardised list of tips.”

Most of the tips revolve around legal issues and it is no surprise that a growing number of legal professionals are joining real estate.

TIP 1: CONTRACTS: First time home buyers are involved in entering into written contracts, firstly between the seller of the property and the home buyer and secondly between the home buyer and a financial institution who gives finance in respect to of the property.

TIP 2: SPOUSAL CONTRACTS: There are then certain contractual obligations which arise between the seller and the buyer of the property, and they include the status of the parties: If it is a married couple, married in community of property, both spouses must sign the contract or if one only signs it, then with the written consent of the other spouse. Where parties are married out of community of property, they are two separate persons with separate estates, meaning if only one of them buys a property, then only that spouse needs to sign any document, but if they both purchase a property, in equal shares, then both of them will be required to sign all documents.

TIP 3: BONDS AND CONTRACTS: If the home buyer has to obtain bond finance, the contract will normally stipulate a time period within which to apply to a financial institution and obtain the necessary bond finance in terms of the contract.  If the application for bond finance is unsuccessful, then there exists no contract between the buyer and the seller, but if bond finance is obtained within the stipulated time period, a valid and binding contract comes into existence between the buyer and the seller.  The buyer cannot after this date simply resile from or cancel the contract without any legal grounds.  If the buyer does, then the seller has a choice either to hold the buyer to the contract and enforce it in a court of law or cancel the contract and claim damages. Another implication might be that the buyer becomes personally liable for the payment of estate agent commission, which is generally the responsibility of the seller who gave the mandate to the estate agent.

TIP 4: OCCUPATION OF PROPERTY: If the buyer takes occupation of the property before registration, it is common for the parties to agree that occupational rental be paid until the date of registration.  Home buyers sometimes find defects in the property which they did not see when they inspected the property the first time and then withhold rental as a condition that the defects be rectified.  This is a breach of contract, which allows the seller to cancel the contract and evict the purchaser if he does not remedy his breach within a notice period specified in the contract.

TIP 5: LEGAL REPRESENTATIVES: Most first time buyers are confused when two attorney firms are involved in the transfer process, the transfer attorney as well as a bond attorney if a transfer attorney is not attending to both the transfer and bond registration.  This situation might give the impression that more costs are involved, which may be true to the extent that if one firm is attending to both the transfer and bond registration, then the costs may be negotiated with such firm to the advantage of the home buyer.  In any event, irrespective if one or two firms are involved, there is costs payable for both the transfer and bond registration.

TIP 6: TRANSFER DUTIES: No transfer duty is payable if the purchase price is less than R600 000.00.  First time buyers are sometimes under the impression that this also means that no costs are payable, which is not the case.  Transfer duty is a tax exemption, while transfer costs does not form part of it, and are costs incidental to the transfer process, for example attorney fees and deeds office fees.

TIP 7: BANK AND BANK OMBUDSMAN TIPS: Home buyers should be under no illusion about a bank’s valuation for bond purposes, which is not an indication of the real value of the property, but simply an administrative act to ensure that there is security in the property for the bank.

The ombudsman for Banking Services gives the following hints on their website, www.obssa.co.za in respect of a mortgage bond: 1.) When building a home, do not sign consent to progress payments before you are satisfied with the work done.  2.) Obtain expert advice necessary and do not rely on the bank’s assessor. 3.) If you are buying a renovated or older home, it is advisable to obtain the services of an expert to inspect the building.  You cannot rely on the bank assessor to do this for you. 4.) Check with your bank what insurance cover you have in place on your bond account. 5.) Verify that you know the difference between House Owners Cover – which is insurance against damage to the property and Home Owners Life Cover / Life Protection Insurance – which is insurance against death of disability. 6.) In the case of a married couple or where the bond is registered in to parties’ names, ensure that those are insured. 7.) The onus is on the home consumer to ensure that the payments are made every month to the insurance company.

TIP 8: ESTATE AGENT UNDERTAKINGS: First time home buyers should be really careful not to fall into the hands of agents who make promises they can’t fulfill. The important thing to remember is that the sales contract is there to safeguard against exploitation.

TIP 9: BOND CONMEN: There are some conmen out there who tell buyers that they can still obtain bonds even if the client is blacklisted. This is probably more the case in areas where there are many first time buyers. It is strongly suggested that first time buyers should go to a registered bond originator like Mortgage Plus for assistance.

TIP 10: AVOID VERBAL AGREEMENTS: If a buyer or seller wants to set certain specific conditions in the sales contract, don’t rely on a verbal agreement. And don’t rush into signing a sales contract. Ensure that you are happy with every word written in the contract.

Please contact us if you require any further information or would like to apply for finance:

Complete this short form online

011.327.4489 / 0861 1111 93

morne@mortgagepluscc.co.za

www.mortgagepluscc.co.za